1. Consumer Discretionary- XLY October 11th 2013- January 18th 2013 Kristen Hecht, Khalid Surur, Matt Vague, Alyssa Wood October 11th 2013- January 18th 2013 Kristen Hecht, Khalid Surur, Matt Vague, Alyssa Wood

2. CND-Last Semester

3. XLY vs S&P 500

4. Current State of Sector  Outperformed the S&P for all four quarters last year  Driven by strong earnings, and increased customer confidence   Index / Index Sector1Q 20122Q 20123Q 20124Q 20122012'13 YTD a/o 1/15  Russell 100012.3%-3.6%5.7%-0.5%13.9%4.0%  Russell 1000 CND.4%-2.7%7.8% 2.0%23.4%4.9%   http://finance.yahoo.com/news/consumer-recovery-russell-1000-r-160203263.html http://finance.yahoo.com/news/consumer-recovery-russell-1000-r-160203263.html  Outperformed the S&P for all four quarters last year  Driven by strong earnings, and increased customer confidence   Index / Index Sector1Q 20122Q 20123Q 20124Q 20122012'13 YTD a/o 1/15  Russell 100012.3%-3.6%5.7%-0.5%13.9%4.0%  Russell 1000 CND.4%-2.7%7.8% 2.0%23.4%4.9%   http://finance.yahoo.com/news/consumer-recovery-russell-1000-r-160203263.html http://finance.yahoo.com/news/consumer-recovery-russell-1000-r-160203263.html

5. Impacts of recent news  Was resilient as a sector through the fiscal cliff  Retail sails in December grew by only.7%, but improved inventory and promotional practices have increased margins  University of Michigan Consumer Sentiment Index dropped to 71.3 in January from 72.9 in December  Was resilient as a sector through the fiscal cliff  Retail sails in December grew by only.7%, but improved inventory and promotional practices have increased margins  University of Michigan Consumer Sentiment Index dropped to 71.3 in January from 72.9 in December

6. Key Drivers/Valuation Multiples  Retail- Same store sales growth and revenue per sq. foot  Consumer Confidence Index and Consumer Sentiment Index  For high growth companies, PEG very relevant  Low growth companies, P/B and P/CF are more relevant  Retail- Same store sales growth and revenue per sq. foot  Consumer Confidence Index and Consumer Sentiment Index  For high growth companies, PEG very relevant  Low growth companies, P/B and P/CF are more relevant

7. Biggest Movers (Oct. 11 – Jan. 18)  Positive:  Abercrombie & Fitch  + 48.37 %  Ford Motor Co.  + 39.15 %  Negative  JCPenney  - 27.92%  Kohl’s  - 14.33%  Positive:  Abercrombie & Fitch  + 48.37 %  Ford Motor Co.  + 39.15 %  Negative  JCPenney  - 27.92%  Kohl’s  - 14.33%

8. Largest Holdings 1.Comcast Corp 6.95% 2.Amazon.com Inc 6.4% 3.Home Depot Inc. 6.36% 4.Walt Disney Co 6.02% 5.McDonald’s Corporation 6.02 % 1.Comcast Corp 6.95% 2.Amazon.com Inc 6.4% 3.Home Depot Inc. 6.36% 4.Walt Disney Co 6.02% 5.McDonald’s Corporation 6.02 %

9. Short Term Outlook  Very Cyclical sector  Holiday season is over  Lots of earnings reports released this week (Starbucks, Coach, McDonalds, etc)  Fiscal Cliff  Very Cyclical sector  Holiday season is over  Lots of earnings reports released this week (Starbucks, Coach, McDonalds, etc)  Fiscal Cliff

10. Past Recommendations  Harley-Davidson Inc (HOG) : BUY  BUY (10/11/12)  +24.37%  women, African-American and Latino customers, as well as to younger buyers, now account for 30 percent of bikes sold and are growing twice as fast as its core market.  Milwaukee-based Harley is introducing an enterprise resource planning production system at its York, Pennsylvania, facility to boost efficiency and allow Harley to better respond to fluctuating market demand.  Harley-Davidson Inc (HOG) : BUY  BUY (10/11/12)  +24.37%  women, African-American and Latino customers, as well as to younger buyers, now account for 30 percent of bikes sold and are growing twice as fast as its core market.  Milwaukee-based Harley is introducing an enterprise resource planning production system at its York, Pennsylvania, facility to boost efficiency and allow Harley to better respond to fluctuating market demand.

11. Past Recommendations  Bed Bath & Beyond Inc (BBBY.O):  BUY (10/16/12)  -10.11%  expects net sales to increase by 24% to 26% in the fourth quarter and by 15% for the full year  VF Corp (VFC):  BUY (10/18/12)  -14.14%  Wrangler jeans are customizing for the motorcycle riding population of India and expect $1.1 billion in revenue to its Asia-Pacific business over the next five years.  Missed 3 rd quarter revenue expectations and growth in its flagship company North Face.  Bed Bath & Beyond Inc (BBBY.O):  BUY (10/16/12)  -10.11%  expects net sales to increase by 24% to 26% in the fourth quarter and by 15% for the full year  VF Corp (VFC):  BUY (10/18/12)  -14.14%  Wrangler jeans are customizing for the motorcycle riding population of India and expect $1.1 billion in revenue to its Asia-Pacific business over the next five years.  Missed 3 rd quarter revenue expectations and growth in its flagship company North Face.

12. Past Recommendations  Starbucks Corp (SBUX.O):  BUY (10/25/12)  +17.42%  Starbucks Corp said it will set up its first outlet in Vietnam early next month as the U.S. chain continues to expand in fast-growing Asian markets.  Yum! Brands Inc (YUM):  NO BUY (11/01/12)  -7.6%  KFC parent Yum Brands Inc said it had stopped using chicken from suppliers in China that are now under a government investigation before the review was even announced and analysts said they expect the company to recover from the business hit in its biggest market.  Starbucks Corp (SBUX.O):  BUY (10/25/12)  +17.42%  Starbucks Corp said it will set up its first outlet in Vietnam early next month as the U.S. chain continues to expand in fast-growing Asian markets.  Yum! Brands Inc (YUM):  NO BUY (11/01/12)  -7.6%  KFC parent Yum Brands Inc said it had stopped using chicken from suppliers in China that are now under a government investigation before the review was even announced and analysts said they expect the company to recover from the business hit in its biggest market.

13. Past Recommendations  McGraw Hill  November 6 recommendation: No Buy  2.82% growth since  New 52-week high December 11  New “SmartBook” technology  Coach, Inc.  November 8 recommendation: Buy  14.64% growth since  Earnings release January 23 -estimates are that COH will beat last year’s earnings -beat estimates last quarter  McGraw Hill  November 6 recommendation: No Buy  2.82% growth since  New 52-week high December 11  New “SmartBook” technology  Coach, Inc.  November 8 recommendation: Buy  14.64% growth since  Earnings release January 23 -estimates are that COH will beat last year’s earnings -beat estimates last quarter

14. Past Recommendations  GameStop Corp.  November 13 recommendation: No Buy  0.09% growth since  New 52-week high on December 13  Analysts questioning if gaming consoles will become obsolete  Tiffany & Co.  November 29 recommendation: Buy  6.69% growth since  Extended stock repurchase program to January 1, 2014 -CEO/Chairman sold off 100,000 of his own shares  Extended agreement with Elsa Peretti for at least 20 years -accounts for ~10% of sales  GameStop Corp.  November 13 recommendation: No Buy  0.09% growth since  New 52-week high on December 13  Analysts questioning if gaming consoles will become obsolete  Tiffany & Co.  November 29 recommendation: Buy  6.69% growth since  Extended stock repurchase program to January 1, 2014 -CEO/Chairman sold off 100,000 of his own shares  Extended agreement with Elsa Peretti for at least 20 years -accounts for ~10% of sales

15. Past Recommendations  Time Warner Cable Inc.  December 4 recommendation: No Buy  5.87% growth since  Earnings release January 31—analysts optimistic, recommending a Buy  Continuing customer care and billing systems with CSG Systems through March 2017  New 52-week high on January 17  Time Warner Cable Inc.  December 4 recommendation: No Buy  5.87% growth since  Earnings release January 31—analysts optimistic, recommending a Buy  Continuing customer care and billing systems with CSG Systems through March 2017  New 52-week high on January 17

16. Works Cited  Finance.yahoo.com  Reuters.com  SeekingAlpha.com  Bloomberg.com  Marketwire.com  Finance.yahoo.com  Reuters.com  SeekingAlpha.com  Bloomberg.com  Marketwire.com